After a year of losing money or generating zero return, the global large-sized (10” or larger) LCD panel business returned to profitability in the third quarter, according to iSuppli’s latest research.
In an example of market trends, the 32-inch HDTV LCD, which is the most popular dimension for large-sized panels, generated a 13 percent profit for the LCD industry in the third quarter. In contrast, the 32-inch panel incurred losses of 12 percent in the second quarter of 2009, 31 percent in the first quarter of 2009 and 23 percent in the fourth quarter of 2008.
The last time the LCD industry cut a profit on 32-inch HDTV panels was in the second quarter of 2008, when they generated a 19 percent return.
Analysts say the main reason LCD panels have not been profitable for so long is the market’s extreme state of oversupply, which resulted in LCD panel pricing that was below manufacturing costs. However, reductions in production and utilization rates, combined with better-than-expected panel demand from China’s television market, helped spur the return to profitability in the third quarter.
A shortage of glass used to make LCD panels also contributed to the tightness of the panel market during the third quarter, further boosting prices and profits.
Worldwide shipments of large-sized LCD panels amounted to 148.3 million units in the third quarter, up 14.3 percent from the second quarter of 2009, and up 28.9 percent from the third quarter of 2008. iSuppli expects to revise this estimate as more companies report third-quarter results.
LG Display was the world’s largest seller of large-sized LCD panels in the second quarter of 2009, accounting for 25.3 percent of shipments. This put LG just slightly ahead of chief rival, Samsung, which had a 24.6 percent share. Preliminary indications show LG and Samsung were engaged in a tight battle for the market’s No.-1 position during the period.
iSuppli predicts that rising fab utilization rates and decreased panel demand following the Christmas purchasing season will drive the large-sized LCD panel market to oversupply in the fourth quarter of 2009, conforming with normal seasonal patterns. However, the reductions in prices and shipments are expected to be only moderate compared to those of a year earlier, in the fourth quarter of 2008.
Many panel suppliers, having just returned to profitability, are maintaining tight control of their inventories and have little motivation to cut pricing drastically at this time, according to the research.